OmiseGo (OMG)

Bitcoin is at $9,800 as of writing, with a lot of pinball price action happening over the past couple of weeks. We have heard nothing but good news. Wyoming is going to be defining a Token that is exempt as a security. This is what we have waited for. Yes, the Swiss had a Token ICO protocol come out, but American businesses are always the ones that wait until one of their own goes first. The Token definition bill is heading to State Congress from State Senate soon, and hopefully we continue to get some good news.

The reason I talk so much about American crypto is because, like it or not, all ICOs are working scared because of the SEC. Americans have not been allowed to launch ICOs easily, nor can they invest in them. This flood gate needs to open. We have a ton of talented people who don’t want to move to Timbuktu to launch a revolutionary idea. I would estimate that we have a crypto-friendly ICO state before the summer.

In the meantime, I am continuing my research on the coins that I hear a lot about. OmiseGO is one of the coins that comes up frequently in discussion. This is a Vitalik Buterin (Ethereum Co-Founder) initiative with a lot of big names and organizations behind it. Full Disclosure: OMG is one of the few coins that I own simply because it is related to Vitalik. I wanted to justify my investment by doing a little more digging on what’s going on behind the hood of the company, and what exactly the ecosystem is going to look like for the company.

Background

The Unicorn (first to achieve $1 billion market cap) of ERC-20 Tokens, OMG was launched in 2017 by its parent company, Omise.

I would categorize Omise exactly like a blend between Ripple’s XCurrent and Xvia for the Asian market. It was founded in 2013, trying to input payment processing systems for organizations and individuals who need quick on-demand payment. An example customer is the e-commerce world. Omise’s software can imbed right onto your website, and you can begin to accept a suite of currencies, both fiat and crypto. The settlement will be in the currency that they have chosen to receive payment in. Sounds like XLM a little bit to me.

OMG token was the next step in the payment processing industry. Omise wanted to provide a way for Southeast Asian populations to be able to utilize the payment processing e-commerce services that they created for their corporate customers. In 2016, KMPG reported that only 27% of the 600 million people in the Southeast Asian region had access to a bank account. With such a tiny penetration rate of financial services, there needed to be a way for people in the region to get their cash on the internet to not only pay for goods and services, but also send money between each other both domestically and globally.

Team

Jun Hasegawa – CEO/Founder: This man knows payment processing. Starting his career in Japan, Jun has focused his 15 year career on figuring out ways to speed up the customer experience of paying for things. His expertise alone has secured over $50 milion in funding for the parent company, Omise. His success within Thailand has made him a key character in Thailand’s interest in blockchain innovation.

Donnie Harinsut – COO/Co-Founder: This guy has the hardest job it seems. He is going around the world to Omise’s different locations, and handling 130 employees. He recently posted a picture with Greylock Partners, a leading Silicon Valley Venture Capital firm. I always like that.

The rest of the Executive team has experience in banking/technology within Southeast Asia, with some being American/European ex-pats. I would say the team is probably the biggest draw to the coin. We already have our historical precedent with their parent company’s success, and they are boots on the ground in their Thailand headquarters. Banking the unbanked would be a little difficult if you are in a cushy Manhattan loft.

Tech Highlights

Decentralized “Plasma” Exchange: The exchange will eventually be freely available to the public, and not owned by any entity. This will allow a structure conducive to the community, where the users have control over their own holdings, and do not need to trust an entity to secure it. This is one of the many reasons why people like Bitcoin blockchain infrastructure so much. When no one is in control, there is inherently less risk.

SDK Wallet: This was the real eye popper during my reading. SDK stands for “Software Development Kit”. This is a wallet platform” you can develop your own white labeled wallet. This will be a way for corporations to have a stake in the blockchain game. They can set up a front-end application wallet that can accept a multitude of different coins/fiat currencies, and convert them into whatever is needed for the given payment or transaction. This is big. I am very excited to see the functionality of a wallet like this.

This is the scenario they are trying to cater to: Remember those 438,000,000 people in Southeast Asia who don’t have bank accounts? They can now access this wallet on their mobile phone, and deposit monies via gift/debit card. This is the same as “Topping up” on cell phone data and minutes. Any time that someone would want to send or pay anything, they would go to a location, “top up” their card with fiat currency, and deposit the contents of the card into their SDK Wallet. They now have complete access to a system that will process their transactions for pennies on the dollar compared to a Western Union. They also have access to pay for E-Commerce goods and services for the first time ever! Sending and receiving money to their families is great, but I really care about them buying stuff online for the first time. No one knows what would happen to the world if all of these people had a way to buy online. I am certainly excited to see it.

Partnerships

There are too many to list. Once again, the theme I am seeing OMG as the Thai version of Ripple. The Omise team did the heavy lifting with developing these payment processing relationships within the country, with no blockchain included. Through the five years of operation, the level of trust has garnered the support of many corporations, to name a few: McDonald’s (Thai), Thai Airways, Thai Union (seafood producer), Allianz Ayudhya (Ilinsurance). The relationship between all of these companies is that they all want to start accepting things other than cash. Allianz, for example, will be one of the first financial services product providers that people in Thailand will use. As wages in these countries grow, they will want the same services developed countries have: life insurance, health insurance, vacations, and most importantly, savings. The OMG Plasma Network & the SDK Wallet provide that access.

Ecosystem

My most dreaded part of the research. The true value of the OMG token (not the OmiseGO network) is in staking. Staking is pledging your tokens to the network to validate transactions, and you will receive a return on the fees for the transactions. Because the blockchain is completely decentralized, no one controls how much one could theoretically make from pledging their coins. It is all based on supply and demand. If a staking user decides to only validate transactions above a certain fee level, that staking user may be waiting a long time, or forever.

This staking mechanism is not completely defined, as the network is in trials. I will be certainly writing a follow-up article once I have seen how the staking works, and the returns available. Remember: You can choose through OmiseGO how you would like to be paid (USD, EUR, OMG, etc.), which could be a game-changer for people with huge amounts of cryptocurrencies that don’t want to take them out of the market. There may be ways to already do this, but this brings a more commercial use-case, rather than crypto use-case.

The proof of stake system is allowing each of our tokens to act as a “miner” validating transactions. This doesn’t require extreme amounts of energy like bitcoin mining, which means you have the ability to make a passive investment 24 hours per day. I like the sound of this! However, I will wait until I have seen it in action before I make any significant investments/comments.

Conclusion

I love this company. Omise makes complete sense to me. They are a boots on the ground Thai company that has built relationships with partners who want to see their customer experience go into the 21st century. Through OmiseGO, remittance transactions will be cheap, companies can develop their own applications to accept payments for goods/services, and decentralized Proof of Stake ensures investment opportunities and unbiased functions.

I am waiting for the staking information to come out before I can categorize the size of the investment opportunity. OMG uses the Ethereum main net, so these two coins are working together. Just recently, we saw Vitalik with the Thai SEC talking about use cases of OMG. The Thai government has welcomed blockchain innovation with open arms. That can’t be said for many other countries with currencies operating within their borders. This is still very much a project, but it is one that I can’t seem to not be excited about.

None of what I have said is a recommendation to buy or sell cryptocurrencies. Please do your own research before investing. As an aside, please do follow me @raijincrypto on Twitter. I would love to know what coins you want more information on, so please do drop me a Tweet if you’d like. Best of luck.